Small business taxpayer using plant costing $300 or less in rental properties

Can a small business taxpayer claim an immediate deduction under section 42-167 of the Income Tax Assessment Act 1997 (ITAA 1997) for plant costing $300 or less, acquired and used to produce assessable income for the taxpayer's rental properties in the 2000-01 income year?

Yes, a taxpayer, who is a small business taxpayer is able to claim an immediate deduction for plant costing $300 or less, to the extent that it is used or installed ready for use, for the purpose of producing assessable income as per paragraph 42-167(2)(a) of the ITAA 1997.

A small business taxpayer has a primary production business. In addition, the taxpayer earns salary and wages and derive income from rental property investments.

Section 42-15 of the ITAA 1997 allows a taxpayer to deduct an amount for depreciation of a unit of plant for an income year if the taxpayer is its owner and the taxpayer uses it, or has it installed ready for use, for the purpose of producing assessable income. If the taxpayer is a small business taxpayer as defined under section 960-335 of the ITAA 1997 and the cost of plant does not exceed $300, the taxpayer may deduct that whole amount in the year it is incurred pursuant to paragraph 42-167(2)(a) of the ITAA 1997.

If taxpayers use an item of plant for a purpose other than producing assessable income, for example, private or domestic purposes, they must reduce their deduction by that part of the plant's depreciation that is attributable to their non income producing use as per section 42-170 of the ITAA 1997.